HSBC completes UK fraud defences

HSBC has completed the roll-out of a bank card fraud management system across all its UK operations, including First Direct and M&S Money.

HSBC has completed the roll-out of a bank card fraud management system across all its UK operations, including First Direct and M&S Money.

The system, developed in partnership with analytics software firm SAS, protects 100% of HSBC's card transactions in 80% of its operations around the world.

Since HSBC launched the system in the US in 2007, it has gone live in all the bank's major regions of operation, including Europe, Asia Pacific, Hong Kong and Brunei.

The remaining regions, such as the Middle East and South America, will go live in the next two to three years.

HSBC will soon begin sharing fraud data with Halifax Bank of Scotland (HBOS), which is to become the second bank to use the SAS Fraud Management software.

"The next set of [fraud detection mathematical] models will include data from both banks," said Derek Wylde, head of fraud risk at HSBC.

According to Wylde, this will further improve the system's accuracy in identifying fraud because it will be using a bigger sample of fraud data.

HSBC is to continue its collaboration with SAS by deploying its fraud technology across all banking products, including online banking and contactless card payments.

"The system will build a typical usage profile for each customer and create alerts for any anomalous behaviour," said Wylde.

The cross-channel system will provide a single view of customers across all the products they use in compliance with Basel 2 regulations.

"This will help identify cases where customers are attacked on more than one front at the same time, overcoming a silo approach to fraud monitoring," said Wylde.

The expanded system will enable HSBC to take fraud detection beyond cards to all fraud, including internal fraud by staff.

Wylde said the cross-channel system was originally scheduled to go into operation this year, but contracts are now in place for the project to go live in a year's time.

HSBC also plans a phased roll-out of the cross-channel system around the world, beginning with operations in Hong Kong.

"Bringing all the data sources into a single system will give us a bit more of an edge in identifying fraud earlier and more accurately," said Wylde.

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